Borrowing against 401k for down payments

[Tim Thorpe]

I’m seriously considering borrowing less than 10% of my 401k for the down payments on 3 investment rental properties. I’ll be paying myself back at 4%. Thoughts/ experiences?

[Adam Gollatz]

Hi Tim, personally I'm really never an advocate of taking from retirement funds. Once you dip in one time, it gets easier to dip in a second time. With that being said, borrowing is much better than taking a withdraw, but have you explored other options like a heloc on your personal residence?

I would take out a spreadsheet and simply do the math, what would your net worth look like taking the loan and buying the property vs letting it sit and grow. More than likely the rental properties will win out because you are leveraging that 10%, but without actual numbers its hard to say. Hope this helps.